Shriram Finance Q1 preview : Net profit likely to increase 17% in Q1FY25

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Shriram Finance, which is scheduled to report its Q1FY25 earnings on July 26, is expected to report a rise in net profit though the net interest margins could drop due to increased cost of borrowings, said analysts.

Shriram Finance is expected to report a 17.3 percent increase in net profit at Rs 2,000 crore in Q1FY25 on a year-on-year (YoY) basis, as per mean estimates by Bloomberg.

Net revenue, however, is likely to fall 37.3 percent to Rs 5,000 crore in the June quarter.

What are the factors impacting the earnings?

Net interest margins - NIM will likely shrink 7 basis points (bps) QoQ to 10.6 percent due to a moderate a 10 bps rise in cost of borrowings, said Kotak Institutional Equities.

Loan growth - The company is likely to report moderate loan growth of 2.5 percent sequentially, and 19 percent in Q1FY25, stated the Kotak report.

Margins - Margin is expected to contract by around 10 basis points QoQ to 9.1 percent, as per a report by Motilal Oswal Financial Services.

AUM - The lenders' AUM is expected to increase by 21 percent YoY and around 4 percent QoQ because of an increase in disbursements to Rs 36,500 crore in Q1FY25.

What to look for in the results?
Analysts say that commentaries on loan growth in the commercial vehicle space and inputs on asset quality in the 2-wheeler space are the key metrics to watch out for.

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